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To qualify as a micro-entity a company needs to meet two out of three of the following thresholds:

  • Turnover not more than £632,000
  • Balance sheet total not more than £316,000
  • Average number of employees not more than 10.

After the first financial year of the micro-entity, the criteria must be met in two consecutive years for a company to qualify and if exceeded in two consecutive years it will cease to qualify as a micro-entity.

Accounting standard FRS105 is available to entities that are eligible for, and choose to apply, the micro-entities regime. For many technical reasons as a firm Aysgarth Chartered Accountants does not really like FRS105. We do use it for some micro-entity firms, for example contractors and personal service companies, but for companies that are seeking to grow we encourage the directors to use the accounting standard FRS102 Section 1A. We can discuss our reasons when we meet-up.

Any entity that is excluded from the small companies regime (or small LLPs regime) may not apply FRS 105. Additionally the following types of entity are excluded from being treated as a micro-entity:

  • charitable companies
  • investment undertakings
  • financial institutions
  • subsidiaries that are fully consolidated in group accounts
  • parent companies that prepare group accounts.

If you would like to understand how this may affect your company then please contact us and we can arrange a meeting with you.


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